Welder v. Green

• Decision Date: 10 December 1998
• Docket Number: No. 13-96-627-CV,13-96-627-CV
• Citation: 985 S.W.2d 170
• Parties: Amos G. WELDER, III, Appellant, v. William O. GREEN, Jr., Appellee.
• Court: Texas Court of Appeals

Page 170

985 S.W.2d 170

Amos G. WELDER, III, Appellant, v. William O. GREEN, Jr., Appellee.

No. 13-96-627-CV.

Court of Appeals of Texas,

Corpus Christi.

Dec. 10, 1998.

John F. Dietze, Rockport, James H. Robichaux, Matthews & Branscomb, Corpus Christi, Bill Green, Beeville, for Appellant.

Robert P. Houston, Cynthia T. Sheppard, Scott Kimball, III, Houston, Marek & Griffin, Victoria, Shirley Selz, Gary, Thomasson, Hall & Marks, Corpus Christi, Janna K. Whatley, Joseph & Whatley, Sinton, for Appellee.

Before Justices DORSEY, HINOJOSA, and RODRIGUEZ

OPINION

DORSEY, Justice.

William O. Green and Amos G. Welder, III, the two partners of the Beeville accounting partnership, Green & Welder, sued each other over issues arising from the dissolution of that partnership. It was a general partnership without a written agreement governing the rights of the partners. The principal issues in this appeal are whether the trial court correctly disregarded the jury's answer that Green violated his fiduciary duty to Welder and the resulting damages, and if Welder is entitled to recover the value of the loss of goodwill of the dissolved partnership. We affirm in part and reverse and render in part.

In 1985 Welder was hired as an associate with the public accounting firm of Millikin, Green & Company, a partnership operating in Beeville, Texas. Welder was invited to buy in as an equal partner in 1989, which he did upon payment of the sum of $180,000 to Millikin and Green. The three partners shared the profits of the firm equally, and the firm's name was changed to Millikin, Green & Welder. Millikin retired in 1991; Welder and Green agreed to buy him out over a five-year term. The name of the firm changed to Green & Welder. There was no written partnership agreement at any time relevant to these proceedings.

Green was the accountant and trustee for a major client of the firm, the Hughes Trust (the Trust). The Trust paid the firm an average of $80,000 in fees each year. From that fee, Green was paid, or paid himself, a trust management fee of $5,000 each year for 1992 and 1993. In December 1994 Green unilaterally increased his fee, characterizing $45,000 as management fees payable to himself rather than accounting fees payable to the partnership. In January 1995 Welder discovered Green's actions and strenuously objected to the decrease in accounting fees paid to the firm. Green immediately sought legal counsel and, on counsel's advice, promptly repaid $55,000 to the partnership, representing his management fees from the Trust of $10,000 for 1992 and 1993 and $45,000 for 1994. Green gave Welder a check for $27,500 and told him the partnership was dissolved.

After an accounting of the firm's finances was prepared, Green offered Welder his one-half of the partnership's net value according to the accounting. Welder refused the offer, claiming Green owed him at least an additional $100,000 for the "goodwill" value of the partnership. Green disputed that any goodwill value was owed, and Welder brought suit.

Welder sued Green on the tort theories of fraud, breach of fiduciary duty, and breach of the duty of good faith and fair dealing, seeking both actual and exemplary damages. He also sued for an accounting to effect a division of the partnership assets and a declaratory judgment to determine his personal liability on the partnership debt owed to his former partner, James R. Millikin, seeking a declaration that he was not personally liable on that debt.

Green answered with the affirmative defenses of waiver and estoppel and sought a declaratory judgment to determine the rights and liabilities of the partnership regarding the debt to Millikin. He also sought a declaration of his rights and liabilities regarding the dissolution of the partnership. Welder brought Millikin into the lawsuit as a necessary party in his counterclaim against Green. Millikin ¹ prayed for judgment against the partnership on a pre-existing debt, and against Welder and Green individually, and jointly and severally. All parties prayed for attorney's fees and costs. At the conclusion of the evidence, the trial court directed a verdict against Green and Welder, jointly and severally, for the $57,500 balance owing on the debt to Millikin. The parties stipulated that Welder was entitled to $17,623.63 as his interest in the undivided partnership property, other than goodwill. Over Green's objections, the trial court submitted questions to the jury on fraud, breach of fiduciary duty, punitive damages, goodwill value of the partnership, Welder's attorney's fees, and whether Green was the managing partner of the partnership. The court also submitted The jury returned a verdict in favor of Welder. The trial court disregarded the jury's answers favorable to Welder on fraud and breach of fiduciary duty, and entered judgment for Welder against Green for $145,123.63, consisting of $127,500 for the goodwill of the partnership and $17,623.63 for undivided partnership assets other than goodwill, plus attorney's fees. The trial court entered judgment that Welder and Green pay one another's attorney's fees and that they split Millikin's attorney's fees. Court costs were assessed 75% against Green and 25% against Welder. With the exception of attorney's fees, judgments favoring Millikin are not at issue in this appeal.

questions on Green's affirmative defense of waiver, his attorney's fees, and Millikin's attorney's fees.

TORT CLAIMS

By his first two points, Welder complains the trial court erred in granting Green's motion to disregard the jury verdict favorable to Welder's fraud and breach of fiduciary duty claims. The jury found Green, as managing partner, breached his fiduciary duty to Welder and committed fraud against him. The jury awarded Welder $67,500 for past lost income, $135,000 for future lost income, $50,000 for mental anguish, and $145,000 for loss of the value of his interest in the partnership. Green challenged the verdict on four points, contending Welder produced no evidence of: damages resulting from Green's mischaracterization of the management fee; damages resulting from Green's "cherry picking" clients; compensable mental anguish; or fraud. The trial court disregarded the jury findings and granted Green's motion that Welder take nothing on his breach of fiduciary duty and fraud claims.

To uphold a trial court's judgment notwithstanding the verdict (j.n.o.v.), an appellate court must determine that no evidence supports the jury's findings. Mancorp, Inc. v. Culpepper, 802 S.W.2d 226, 227 (Tex.1990); Williams v. Bennett, 610 S.W.2d 144, 145 (Tex.1980). When reviewing a no evidence point, an appellate court is limited to reviewing only the evidence tending to support the jury's verdict and must disregard all evidence to the contrary. Mancorp, 802 S.W.2d at 227; Sherman v. First Nat'l Bank, 760 S.W.2d 240, 242 (Tex.1988) (per curiam ). If more than a scintilla of evidence supports the jury finding, it must be upheld. Garcia v. Insurance Co. of Pa., 751 S.W.2d 857, 858 (Tex.1988). Appellate courts must consider the evidence and inferences as they tend to support the verdict and not with a view toward supporting the judgment. Mancorp, 802 S.W.2d at 228. More than a scintilla of evidence exists if the record reveals some probative evidence to support the verdict, no matter how small. Ellis County State Bank v. Keever, 888 S.W.2d 790, 801 (Tex.1994). But a legal principle that prevents a party from prevailing on its claims may authorize a j.n.o.v. Atlantic Richfield Co. v. Misty Prods., Inc., 820 S.W.2d 414, 420-21 (Tex.App.--Houston [14th Dist.] 1991, writ denied).

Welder based his tort claims on the premise that he suffered injury resulting from two tortuous acts at Green's hands: Green breached his fiduciary duty and committed fraud by his mis-characterization of fees due the partnership from the Trust and further breached his fiduciary duty by choosing the more lucrative accounts for himself and employees loyal to him, leaving less profitable accounts to Welder.

FRAUD

The elements of fraud are: (1) a material misrepresentation, (2) which was false, (3) which was either known to be false when made or was asserted without knowledge of the truth, (4) which was intended to be acted upon, (5) which was relied upon, (6) and which caused injury. DeSantis v. Wackenhut Corp., 793 S.W.2d 670, 688 (Tex.1990); Stone v. Lawyers Title Ins. Corp., 554 S.W.2d 183, 185 (Tex.1977).

Welder's pleadings allege Green intended to breach his fiduciary duties at the time of Millikin's departure from the firm and misrepresented his intentions while inducing Welder to enter into an agreement to buy out Millikin's share of the partnership. Welder avers he would not have agreed to the enter into such an agreement with Millikin No evidence supported a jury finding of fraud, therefore the trial court did not err in disregarding that portion of the verdict.

absent Green's fraudulent misrepresentation. However, the record contains no evidence of such a misrepresentation by Green or knowledge by him of any false statements or statements made without knowledge of the truth. Nor is there any evidence Green failed to disclose facts for the purpose of inducing Welder to purchase Milliken's interest.

CONSTRUCTIVE FRAUD & BREACH OF FIDUCIARY DUTY

The charge submitted to the jury on the issue of fraud contained an instruction on constructive fraud. Though presented as separate grounds of recovery, in the context before us, constructive fraud and breach of fiduciary duty amount to identical causes of action. Both require the existence of some special relationship and a breach of the trust engendered by that relationship. See Archer v. Griffith, 390 S.W.2d 735, 740 (Tex.1964). We will consider them together.

Partners are charged with a fiduciary duty. Bohatch v. Butler & Binion, 977 S.W.2d 543, 544-45, 41 Tex. Sup.Ct. J. 308 (Tex.1998); AIG Risk Mgmt., Inc. v. Motel 6 Operating L.P., ...